--> Market Testing Support (XLP)

Market Testing Support (XLP)


Commentary:

Stock closed near session lows on Friday as trade waned. All five major indices lost significant ground as bears continued to exert control over the market. The higher beta S&P MidCap 400, small-cap Russell 2000 and Nasdaq dropped 1.8%, 1.7% and 1.6% respectively. The Dow Jones Industrial Average slid 1.6% while the S&P 500 fell 1.5%.

Market internals were mixed on Friday. Volume fell on both exchanges. The Nasdaq saw a decline in turnover of more than 14.0% while trade on the NYSE dropped by a more modest 5.7%. Nonetheless, declining volume outpaced advancing volume on the Nasdaq by a factor of 2.8 to 1 while on the NYSE the ratio ended the session at 5.6 to 1. Due to Friday’s lighter volume we would not classify the session as a distribution although the price action does not bode well for the market.

The SPDR S&P Select Consumer Staples ETF (XLP) found resistance at its 200-day MA and 20-day EMA on Thursday as it gapped down on a spike in volume. Yesterday, after a morning gap down, XLP rallied back into its 20-day EMA, reversed and ultimately closed near the session lows. A move below the two day low of $29.33 may provide a short entry trigger for this ETF. We are monitoring this ETF closely for a potential short entry point.

Since finding a bottom on August 9th, the SPDR S&P Select Utilities ETF (XLU) has rallied into resistance of, and is now consolidating at its 200-day MA. A volume fueled move back below the two day low of $32.09 could result in a retest of the swing low established on August 9th.

Via an intraday alert we covered our short position in IYR for a healthy 3 point gain. EWM remains on our watchlist as it did not trigger on Friday. The market remains under pressure and the major indices are now testing their 10-day lows. In a range bound or up-trending market this swing low would generally be expected to serve as a reliable support level. However, with the extreme volatility in the market and the recent erosion of market internals, we would not be surprised if the market ignored this support level and took another dramatic leg down.


Today’s Watchlist:


EWM
Short

Shares = 400
Trigger = 14.17
Stop = 15.08
Target = New swing low
Dividend Date = n/a

Notes = See commentary from 8/19 report


Daily Performance Report:

Below is an overview of all open positions, as well as a performance report on all positions that were closed only since the previous day’s newsletter. Net P/L figures are based on the $50,000 Wagner Daily model account size. Changes to open positions since the previous report are listed in red text below. Please review the Wagner Daily Subscriber Guide for important, automatic rules on trigger and stop prices

    position summary

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    Notes:

  • Per intraday alert, covered IYR to lock in a a quick $400 gain.
  • Reminder to subscribers – Intraday Trade Alerts to your e-mail and/or mobile phone are normally only sent to indicate a CHANGE to the pre-market plan that is detailed in each morning’s Wagner Daily. We sometimes send a courtesy alert just to confirm action that was already detailed in the pre-market newsletter, but this is not always the case. If no alert is received to the contrary, one should always assume we’re honoring all stops and trigger prices listed in each morning’s Wagner Daily. But whenever CHANGES to the pre-market stops or trigger prices are necessary, alerts are sent on an AS-NEEDED basis. Just a reminder of the purpose of Intraday Trade Alerts.
  • For those of you whose ISPs occasionally deliver your e-mail with a delay, make sure you’re signed up to receive our free text message alerts sent to your mobile phone. This provides a great way to have redundancy on all Intraday Trade Alerts. Send your request to [email protected] if not already set up for this value-added feature we provide to subscribers.

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      Edited by Deron Wagner,
      MTG Founder and
      Head Trader

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